In Startling Note, Goldman Warns Economy Shifting “Into Disequilibrium” Under Trump, Increasing Recession Odds

It was about a year ago when, in a note brimming with optimism, Goldman Sachs (which had just released its Top 6 trades for 2016, 5 of which would close out at a loss just two months later) predicted that the Fed would hike rates 3 times in 2016, a year in which the economy was expected to storm higher. It has yet to hike them once (although the market is 90% convinced this will happen next month) even as the economy has done virtually nothing, and some can argue contracted further for most of the world class leading to Donald Trump’s “surprise” victory.
Fast forward one year when here we are again, a few weeks ahead of the Fed’s December hike (which probably will happen now that everyone is freaking out about the Trumpflation tsunami even though nobody has actually seen any detail thereof), and out comes Goldman – like clockwork – with another report in which it forecasts the same as it did a year ago: namely three Fed hikes in 2017 after the December one; in other words, Goldman believes that by the end of next year, the Fed Funds rate will be around 1.50%, or where the 10Y was just two months ago.
Good luck, and we say that because a closer read of the Goldman report reveals that while Jan Hatzius lays out all the optimistic highlights that have been factored in by stocks and bonds as of this moment, he proceeds to highlight in extensive detail why not only Trump’s policies may not be largely implemented, but why the market could be significantly disappointed.
Here are some of the highlights from the Goldman notes penned by chief economist Jan Hatzius:

This post was published at Zero Hedge on Nov 20, 2016.

Comments are closed.